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Earnings Scorecard: Comcast Corp. - Analyst Blog

Following the first quarter earnings announcement on May 2, most
of the analysts covering
Comcast Corporation
(
CMCSA
) have revised their estimates.

The brokers have revised their estimates based on the belief
that the company will do well in the core cable operations, NBC
Universal business and home security service segments. However,
they remain concerned about the surge in programming cost that
could increase tariff rates leading to slower ARPU growth.

First Quarter Highlights

On a GAAP basis, quarterly net income was $1,224 million or 45
cents per share, compared with $943 million or 34 cents per share
in the year-ago quarter. Adjusted EPS of 45 cents was slightly
ahead of the Zacks Consensus Estimate of 42 cents.

Quarterly total revenue of $14,878 million was up 9.6% year over
year, and substantially above the Zacks Consensus Estimate of
$14,405 million. Operating margin was 18.5% compared with 18.3% in
the prior-year quarter.

Agreement of Analysts

Of the 19 analysts covering the stock in the last 7 days, two
analysts have revised their estimates upward while three have
revised downward for the second quarter of 2012. For the third
quarter of 2012, out of the 18 analysts covering the stock, three
have revised their estimate upward while one has revised their
estimates downward.

For fiscal 2012, out of the 21 analysts covering the stock in
the last 7 days, five analysts have revised their estimates upward
while one has revised downward. For fiscal 2013 out of the 19
analysts covering the stock, four analysts have revised their
estimates upward and two revised downwards.

Currently, the Zacks Consensus Estimate for the second quarter
of fiscal 2012 is 49 cents, with a projected annual growth of
16.67%. For the third quarter of fiscal 2012, the Zacks Consensus
Estimate of 45 cents indicates an annual gain of 35.52%.

Magnitude of Estimate Revisions

During the past 7 days, the current Zacks Consensus Estimate for
the second quarter of 2012 has been in line with the previous
estimate of 49 cents while, for the third quarter of 2012, the
current Zacks Consensus Estimate exceeded the previous estimate by
a penny. The current Zacks Consensus Estimate for fiscal 2012 and
2013 exceeds the prior estimate by a penny.

Earnings Surprises

The company has outdone the Zacks Consensus estimates in three
out of the four previous quarters. In the first quarter of 2012,
Comcast Corporation outpaced the estimate by 3 cents or 7.14%.

The estimates for the ongoing and third quarter of fiscal 2012
are in line with the Zacks Consensus Estimate. Similarly, the
estimate for fiscal 2012 is also in line with the Zacks Consensus
Estimate. However, fiscal 2013 estimates contain an upside
potential (essentially a proxy for future earnings surprises) of
0.45%.

Our Recommendation

We believe that Comcast Corporation will benefit from the
deployment of Xfinity TV, an on-demand web based service that
offers video programming and internet features. Amidst the current
economic situation, the company's ability to reduce its video
subscriber churn rate is a positive. Additionally, introduction of
several innovative services like Xcalibur services, home security
services and expansion of Wi-Fi network will be the potential
growth driver for the company.

Cable operator like Comcast Corporation are facing stiff
competition from the telecom service providers like
VerizonCommunication Inc
(
VZ
) and
AT&T Inc
(
T
) who are gaining market share in the fibre-based TV and other high
speed broadband service segment.

Moreover, online video streaming service providers such as
Netflix Inc
(
NFLX
), Hulu.com and uTube are potential threats to cable operators. The
company is facing additional pressure from rival
TimeWarner Cable Inc
(
TWC
) in the small and medium business (SMB) segment.

As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
http://www.zacks.com/education/

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